WASHINGTON, D.C., U.S. — Soon after the accession of Argentina’s President Maurico Macri on Dec. 10, 2015, his administration implemented a series of significant policy changes in the agricultural sector affecting the entire grain and oilseed sector in Argentina, the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) reported on Feb 1.

These changes included the reduction of the export tax on soybeans and its byproducts by 5 percentage points and eliminating export taxes on all other agricultural commodities. Agricultural commodities with a new zero percent export tax include meat products, grains, fruits, and vegetables among other products. Soon after that, the Macri administration eliminated export permits (ROEs) for grains and oilseeds. This dropped the pre-approval requirement for export sales and eliminates an intrusive control on the flow of grain exports, particularly corn and wheat.

Along with these policy changes came the removal of foreign exchange restrictions and devaluation of the Argentine peso by about 45% on Dec. 17, 2015. This boosted the competiveness of agricultural exporters and was a positive signal to producers who waited for such an adjustment to occur before they began liquidating their inventories. In the short term, these changes are expected to spur an increase in the sales of Argentine agricultural commodities, particularly corn and wheat, on the world market, the report said. Medium to longer term, these changes are expected to significantly improve farmer returns (where in most cases were negative prior to these policy changes) and encourage greater wheat and corn planting for the 2016-17 season and beyond.

For oilseed production, these changes are not expected to have a significant impact for the 2015-16 season as the policy and monetary changes came after producers had largely finalized their planting decisions or planted already. As for 2016-17, sources expect soybean production to remain relatively stable.

Argentina’s local crop progress reports indicate that as of late January the entire 2015-16 soybean crop has been planted – about 21.5 million hectares. While some areas are affected by a lack of moisture, overall conditions in the main producing areas are generally good.

The report indicates there will likely be some area losses due to inclement weather, yet production is expected to be strong as most soybeans were planted in the most productive areas which should result in above average yields. In summary, 2015-16 total area harvested remains unchanged at 20 million hectares with yields at 2.93 tonnes per hectare leading to an upward revision of 58.5 million tonnes in 2015-16.

The 2014-15 crush is revised up to 42.3 million tonnes based on year-to-date crush data by Argentina’s Ministry of Agro-Industry. Crush continues as exporters find it more lucrative to crush soybeans (to export its byproducts) instead of selling the beans. 2015-16 crush is left unchanged.

Argentina’s 2014-15 exports are revised slightly up to 11.85 million tonnes based on current trade data and perspective sales based on the ROE registry. During the early part of January, the Ministry of Agro-Industry noted its expectation that soybean exports were going to be higher during the month of December after the various policy changes.

Many market observers expected a significant sell-off of Argentine soybeans; however, producers did not sell as much as they expected a higher dollar around 14-15 Argentine pesos per U.S. dollar, instead the dollar averaged around 13.5 pesos during the second half of December. The 2015-16 exports are left unchanged at 11.4 million tonnes, since exporters have generally found crushing soybeans presents more lucrative returns than exporting soybeans.